US market risk premium used in 2011 by professors, analysts and companies: A survey with 5.731 answers

Pablo Fernandez, Javier Aguirreamalloa and Luis Corres
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Javier Aguirreamalloa: IESE Business School, Postal: Research Division, Av Pearson 21, 08034 Barcelona, SPAIN
Luis Corres: IESE Business School, Postal: Research Division, Av Pearson 21, 08034 Barcelona, SPAIN

No D/918, IESE Research Papers from IESE Business School

Abstract: The average Market Risk Premium (MRP) used in 2011 by professors for the USA (5.7%) is higher than the one used by analysts (5.0%) and companies (5.6%). The standard deviation of the MRP used in 2011 by analysts (1.1%) is lower than the ones of companies (2.0%) and professors (1.6%). Most previous surveys have been interested in the Expected MRP, but this survey asks about the Required MRP. The paper also contains the references used to justify the MRP, comments from 58 persons that do not use MRP, and comments of 110 that do use MRP. The comments illustrate the various interpretations of the required MRP and its usefulness. Professors, analysts and companies that cite Ibbotson as their reference use MRP for USA between 2% and 14.5%, and the ones that cite Damodaran as their reference use MRP between 2% and 10.8%.

Keywords: equity premium; required equity premium; expected equity premium; historical equity premium (search for similar items in EconPapers)
JEL-codes: G12 G31 M21 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2011-05-01
New Economics Papers: this item is included in nep-cfn, nep-fmk and nep-upt
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Citations: View citations in EconPapers (3)

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